Ankur Banerjee
SINGAPORE (Reuters) – The dollar remained stable on Tuesday, but it endured six months of trough against Yen, a hit last week, as investors struggled to understand the changes before and after US tariffs.
Still, the currency markets have settled far more after Asia hours after severely damaging the dollar despite a surge in Treasury yield after last week’s turmoil, highlighting the trust of volatile investors in greenback and US assets.
The dollar was 0.27% higher at 143.53 yen, but remained at the six-month low of 142.05 mentioned on Friday. The euro last week slacked its three-year high of $1.1474 to $1.1324 by 0.22%.
The dollar was 0.3% higher in Asian time after falling to its 10-year low against the Swiss franc last week. The dollar fell nearly 8% this month against the Swiss franc, set to its biggest monthly decline since December 2008.
The market focus was on the ever-changing tariff headlines, as the US removes smartphones and other electronics from its Chinese duties over the weekend to provide some relief, but comments from President Donald Trump suggested that the refrain was likely to be in a short period of time.
Trump’s imposition and subsequent sudden postponement of tariffs on goods imported into the US have been confusing and increasing uncertainty among investors and policymakers around the world.
Kieran Williams, head of Asia FX at Intouch Capital Markets, said policy disruption and erosion on investor trust is driving a slow, stable turnover from dollar assets.
“The recent setback on US tariffs has eased some of the acute market anxiety and eased the safe appeal of the dollar in the near future.”
After dropping nearly 13 basis points in the last session, Benchmark US 10 Year Treasury bond yields remained stable at 4.354%.
Yields rose by around 50 basis points last week on the largest weekly profit in over 20 years as analysts and investors questioned the bond’s status as the world’s safest asset.
“Last week was about delaboration, liquidation and reallocation of assets from US assets. This week’s tone will settle with a reduced holiday week.”
“It was Dub’s comments from Fed officials who helped set the tone, suggesting they were looking beyond inflation.”
Gov. Christopher Waller said Monday that the Trump administration’s tariff policy was a major shock for the US economy, allowing the Federal Reserve to cut interest rates to retreat from the recession, even when inflation is high.
